The Chinese Dragon Sweeps Through Latin America

Any U.S. policymakers who doubt the strategic and economic significance of Latin America should spend a few minutes chatting with their counterparts in Beijing.

Over the past decade, China has been on a wild spending spree throughout the Western Hemisphere — targeting Brazilian iron ore, Chilean copper, Peruvian zinc, Argentine soybeans, Venezuelan and Ecuadoran oil, Uruguayan meat, Bolivian lithium, and other economic resources. The Chinese have flooded the region with both investment and cheap labor (about which more later). They are funding construction of a hydroelectric plant for Ecuador, a satellite for Bolivia, and much else. Beijing already built a satellite for Venezuela, which launched in 2008, and a national soccer stadium for Costa Rica, which opened this year. In March 2010, the China National Offshore Oil Company announced that it was purchasing 50 percent of the Argentine firm Bridas, and Bridas subsequently bought a $7.1 billion stake in the Argentina-based Pan American Energy. In October, another Chinese energy giant, Sinopec, agreed to invest over $7 billion in the Brazilian operations of Repsol, a Spanish company.

China’s fast-growing economy needs massive supplies of petroleum, so we should not necessarily be surprised that Beijing has pursued Latin America’s abundant oil and gas reserves. But we should be somewhat alarmed that, in the face of China’s growing regional presence, the Obama administration continues to treat Latin America as an afterthought. Speaking at Brown University in early April, Colombian President Juan Manuel Santos (a strongly pro-U.S. leader) criticized Washington’s apparent lack of interest. “While the rest of the world, while Europe and Asia, are strengthening their ties to our region, the U.S. is passive, is disengaged,” Santos said. The hemispheric leadership void has been filled not only by China, but also by Russia, which is enabling Venezuela’s gigantic arms buildup, and by Iran, which has established a strategic partnership with Venezuela and is cozying up to populist governments in Bolivia, Nicaragua, and Ecuador.

True, the Obama administration is finally preparing to send Congress the Panama and Colombia free-trade agreements (FTAs) — which were originally signed several years ago by the Bush administration. But it should have finalized these deals much sooner. Throughout 2009 and 2010, the United States did virtually nothing to promote hemispheric trade liberalization. Meanwhile, it provoked a needless trade dispute with Mexico by banning Mexican trucks from U.S. roads.

The best that can be said about Obama’s Latin America policy, thus far, is that his administration eventually came to the correct position on free trade, and that it eventually came to the correct position on the 2009 Honduran political crisis (after wrongly labeling the ouster of Manuel Zelaya as a “coup” and effectively outsourcing the issue to the dysfunctional Organization of American States). Obama wisely traveled to Brazil in mid-March to fortify U.S. relations with Latin America’s biggest and most populous country. But as the Christian Science Monitor reported, following the president’s visit, Brazil gave Obama a “cool reception” that “contrasts with China’s quiet but effective cash diplomacy in the region.” His administration sought a rapprochement with Ecuador, but its efforts were not reciprocated. Last month, the country’s increasingly authoritarian left-wing president, Rafael Correa, expelled the U.S. ambassador from Quito in a fit of anger over the WikiLeaks cables.

Each of Obama’s four immediate predecessors in the White House spearheaded at least one major hemispheric initiative. Under Ronald Reagan, the U.S. established both the Kissinger Commission on Central America and the Caribbean Basin Initiative (CBI). Under George H. W. Bush, it launched the trade negotiations that ultimately led to NAFTA and also started the Enterprise for the Americas Initiative. Under Bill Clinton, it completed NAFTA, formed the Summit of the Americas, expanded CBI trade preferences, and pushed for a Free Trade Area of the Americas. Under George W. Bush, it signed FTAs with Chile, Central America, the Dominican Republic, Peru, Colombia, and Panama, while also creating the anti-drug Mérida Initiative.
Obama has yet to unveil any original Latin American initiative of similar size and scope. Beijing, by comparison, is brimming with ambitious plans for the region. For example, it has proposed building a $7.6 billion “dry canal” (a railway line) that would stretch across Colombia and connect the Caribbean with the Pacific Ocean. Such a project would obviously have enormous economic and strategic consequences. The competition for influence in Latin America is not a zero-sum game, but it’s still worrisome that Chinese influence is surging at a time when U.S. influence appears to be stagnating or perhaps even declining. Beijing’s rapidly expanding regional footprint threatens to hurt the diplomatic interests of Taiwan, which has spent decades cultivating partners in the Western Hemisphere.

While dollar diplomacy has boosted Beijing’s image in the region, the concurrent influx of low-wage Chinese workers has generated tensions. The Chinese government seems to harbor a quasi-colonial attitude toward developing countries, and its heavy-handed approach has produced a considerable backlash. On the “soft power” side, moreover, the U.S. still holds a significant edge over its Asian rival.

Hopefully, the U.S. will use China’s increased hemispheric activity as motivation to reinvigorate its own engagement. When it comes to Latin America policy, the Obama administration has largely wasted its first 27 months in office. Across the region, as Beijing continues its aggressive outreach, patience with U.S. dithering is wearing thin.

Ignorant comment indeed.
English Only movement refers to official use of the language.
While Latin American countries insist that official transactions be conducted in Spanish (or Portuguese), the U.S., a true melting pot, has no such official language.

What you refer to as “conservatives”, thinking perhaps in Latino “derechistas”, is nothing more than American citizens who have tired of the cascading ambiguities caused by covetous newcomers. Read your history. America always welcomed all comers but rejected the rapacious among them.

There lies a certain taint of racism under your remarks, and certainly an ignorance of American history.

Jimmy, you’ve got it backwards and upside down. We must have NO “free trade agreements” if we want Americans to have jobs. I’m not going to explain why, but any intelligent twelve year old can tell you all about it.
We don’t want ANY Mexican trucks cruising our roads, defective, unlicensed, uninsured, and carrying tons of drugs and illegal aliens.

An excellent article, and one that highlights China’s signature methods of strategic foreign engagement. Wherever China goes, you see the extraction of mineral resources and investment in transportation and warehousing infrastructure. These sectors guarantee lots of revenue (and minerals needed by China), but they also position China to move big things like industrial equipment around without raising third-party eyebrows.

It’s worth noting a couple of other things. China sent navy ships for port calls in several Latin American nations in late 2010 — not a first, but very unusual. Such port calls had been conducted only once before, nearly a decade earlier. The 2010 voyage occurred in the same period as China’s new naval foray into the Mediterranean, with her ships dispatched on the anti-piracy mission off Somalia. China is really “busting out” in terms of naval deployments — and one of her first, high-priority stops was Latin America. The Chinese have also been hawking arms in Latin America and signing military cooperation agreements left and right.

China’s not the only one, of course. The Russians continue their engagement — including massive arms sales — with the worst actors in the region, and Iran is best buds with Hugo Chavez and Rafael Correa (and reportedly working on a similar relationship with Daniel Ortega).

Mr. Daremblum is right: Obama has shown little initiative in Latin America. I am concerned about the trend of US relations with long-time friends like Colombia, Honduras, Costa Rica, and even Panama. Frankly, it should have been no contest which of the US or Venezuela got Walid Makled from Colombia. The decision of traditional, pro-US conservative Juan Manuel Santos, that it was smarter to throw a bone to Chavez, is very informative about the perception of Obama’s America south of the border. This comes at a particularly bad time, too, when much of Latin America is bustling as never before with economic success and optimism. I can’t count the number of times I have heard in the last couple of years, from Americans who have occasion to travel there, that the energy level and sense of promise are markedly higher in Latin America than in the North.

Again, thanks for an excellent piece. I recommend including Mr. Daremblum’s credentials in English as well as Spanish.

Makled was sent here in exchange for the payment of the huge debt Venezuela has with Colombia and perhpas ubder pressure for the revelations by Makled abouut narcotraffic and the data in Reyes laptop.
China has invested in Latinamerica but not in Venezuela. Oil is the guarantee of usurary loans that Chavez government has asked China to fuel his reelecction effort.bassically Venezuela is paying China for the venezuelan oil

If the US (not only Obama but his predecessors also) would’ve paid to Latin America the same attention and treasure lavished to Europe and the Muslim countries there would be no red Cuba or Venezuela, and the communists would’ve never made any inroads.

American neglect is responsible for turning a continent of friends into a clearly unfriendly continent. To undo that damage it will take many many decades.

More accurately, Latin America is a continent containing some friends of the U.S.

“American neglect is responsible for turning a continent of friends into a clearly unfriendly continent.” This is overstated as a general principle, but is no doubt more in evidence with the Obama administration. They simply have more than they can handle. We must never again allow ourselves to be so snookered at election time.

The U.S has always had rocky commercial relationships with Latin America. In time they will learn these same lessons apply to the Chinese business pratices. Only the native language of these new capitalists has changed.

The author did not pay attention to the fact that the U.S. is still the largest source of Foreign direct investment in Latin America. He mentions the investment of the Chinese government, but when have the U.S. government invested in rails, minerals or things like that anywhere? That’s usually done by private companies, something that escape the author.

A brief look at the web site of the U.N. Economic Commission for Latin America and the Caribbean (eclac.org) will have taught him that; the information is in a .PDF file and you need to register, so I can’t post a link here. It shows that the U.S. is the main source of investment in the Latin America (the Dutch are 2nd and Chinese third).

Another point that the author ignores is that some of those Chinese “investments” don’t seems to make sense at all. Take the train in Colombia, the “dry channel” that would compete with the Panama canal. What’s the business sense of it? If it’s such a great idea, why it have not been proposed by private investors? What’s the business case for unloading a boat in Colombia, putting everything in a train and then loading everything back up on a Caribbean port?

A friend of mine who was commander of a U.S. navy supply ship tells me that it takes at least four hours to unload a big container ship. Let’s say that it takes about the same time to load it back in and add whatever it will take to move the containers by train. Will it be faster than the 9 hours that it takes on average to cross the Panama Canal?

One economic incentive for a trans-Columbia rail line might be the physical limits of the Panama Canal.

The largest ships that can transit the canal are called “Panamax” ships. Container ships and oil tankers that do NOT have to transit this canal are certainly economical on other runs as economies of scale apply to commercial shipping.

One could make a business case for ports on either end servicing container ships larger than Panamax and that this bimodal system could pay off. However, I’m not a shipping expert.

The US still has the power but has lost the will under Obama, good bye South America. If you don’t control who is in your backyard its impossible to dictate the rules. You lose eventually if you lose either the will or the way to protect your interests. I think a future classic example will be Britain losing the Falkland islands to Argentina now that they no longer have the means to protect them, scraping of their only air craft carrier, the Arc Royal. Does it really matter how you lose them? Neglect, disinterest, or lack of power. Time will tell.

Britain seems to be losing Britain the way things are going there, so for ordinary Brits the Falklands will be of far lesser importance.
If Iranian hegemony gets, with current Chinese backing, to control the Arabian peninsula and Red Sea Europe is going to be a sorry mess and people will look to Brazil for a “first” world country.

Why does America these days exhibit such a suicidal, reckless disregard for self-interest? It didn’t start with Obama, although he is magnifying the level of recklessness almost exponentially.

Afghanistan supposedly has recently-discovered vast strategic mineral wealth. The discovery was — I believe — made by American geologists. It will be the Chinese who exploit it, using primarily Han Chinese workers.

We also got no special deals on Iraqi oil. All this is sheer, senseless stupidity.

Its very simple – the vast majority of the “Big Money” have decided that it is far better for their egos and sense of security to be “Plantation Owners” in a broke, third world, economy filled with impoverished, desperate slaves than to have so many uppity Middle-Class, armed, free, citizens (who created a the greatest global power the world has ever known) who refuse to bow in obeisance and submit to the whims of their betters.

Part of China’s interest in Central America was that it is one of the few areas where a number of countries still recognized Taipei, not Beijing, as China. Admittedly, that was because Taiwan gave a lot of money to Central America to keep that recognition afloat, but China is starting to roll over some of those countries. Costa Rica just changed to recognizing Beijing and got, for its trouble, a brand new soccer stadium. Of course, Beijing brought in all of its own workers and created pretty much *no* construction jobs or jobs in related trades. Costa Ricans sold them a lot of lunch, but beyond that, they didn’t see much in the way of secondary economic benefits from it.

Don’t be fooled. This neglect is getting the results that those in power want. Do you really believe that your interest and well-being or economic freedom are a priority to the powers that be? It maybe a shame, but it is no accident.

Will you quit worrying about China, for gosh sakes? China is in a similar position to Japan in 1989, but with less advantages and more burdens, including corruption, pollution, and social/demographic problems. Let China buy all the assets she wants to buy at the top of the market; the market will soon come crashing down and all that money will benefit third-world countries, in the unlikely event that the third-world countries are able to use their gains wisely.

It is a constant source of amazement that otherwise intelligent people can repeatedly convince themselves that the latest economic bubble is for real, and that “this time it is different”. That is a tired old refrain heard serially in the Roaring Twenties, in Japan in the 1980s, in Clinton’s Dot.com Bubble, and in the Democrats’ Unaffordable Housing Project. Look what it has gotten us: trillions of dollars gone with the wind. There is no hope that the China Bubble is different, or that it will differently. So relax.

China is in a similar position to Japan in -1-9-8-9–>1939.
FIFY; US denial of Imperial Japanese access to critical natural resources,
such as ores in South America, was the casus belli for the Pacific War.

I’m not so sure about this analysis: for example, in Brazil (I’m Brazilian) Politically the country has veered sharply to the left. Economically, Brazil is a fascist, state governed type organization (more companies are closing down and quitting,i.e., just leaving the country, due to their share of profits going to feed bloated, corrupt government policies). These two areas of “compatibility” align mostly with Chinese Political/Economic realities than with American Capitalism tenets. Having said that, Chinese (Mandarin – 7,500 characters) is now taught in grade schools…not English. More Chinese “manager-types” are evident, given the large number of long term contracts China’s Central Committee has signed with the Brazilian government and State-run entities. Chinese automobiles are now evident on Brazilian highways. One is most likely to “bump into” an Asian-type representative in almost any sector of Brazil’s economy. Brazil’s President, Congress and Senate are rife with Communists and Socialists. Philosophical, political and economic “parity” is closer to China’s than USA’s. There’s nothing the US can do to change this rush towards State control of Latin America’s largest land mass and population. This started in the ’50′s and ’60′s, was halted…now, it’s back in full force. Has to be shown to be an empty shell…this may take a full generation to come full circle to capitalism. In the meantime, watch Brazil’s wreathing under the weight of full blown fascism.

You do see things clearly indeed.
It’s a pity though, that none of us here now will outlive the “full circle” return to progress. As a Latino industrialist told me about Cuba some time ago, “It took them 50 years to sink this low, it will take them 70 to just get back to the level they had started at.”

cit.: the U.N. list of nations according to ‘penetration of middle class in society’ placed Cuba as No. 4 — that was in 1959, the same year the spoiled upper class brats took over in name of “the collective”.

If the American response to the Chinese surge is electing an incompetent narcisist leftie for president of the country, the Chinese world’s hegemony throughout the 21 century is assured.

While the U.S. gets busy with the likes of Paris Hilton or Donald Trump and waits for its intelectual super-stars Michael Moore, Noam Chomsky and Tony Kushners to direct their academic efforts, the Chinese are busy building highways, dams, seaports and factories.
While the U.S. puts an incompetent Charles F. Bolden as director of one of its major scientific and technology agencies, instructing him to go cozy-up to the muslims instead of assembling missions to Mars, the Chinese are investing heavily in science and technology.
While the U.S. universities becomes centers for anarchy and recipients of arab grants destined to reduce their academic value, the Chinese are educating a few tens of millions of engineers, scientists, technicians and professionals.

Guess who is going to be the 21-st century’s world’s “only remaining super-power”?

You’ve pointed out the real difference: the Chinese are serious about advancing as a nation, while the Obama regime is talking about “hope and change”, kowtowing to muslims and trying to grant voting rights to 20 million illegal aliens.

And the Chinese are doing all this, with the trillions of American dollars supplied by US trade with, and investment in China. We capitalists are truly “selling them the rope they will hand us with” as Nikita Khruschev once stated.

China has the very large advantage of not having to make a business profit. Because it is a government investment without debt they can make much sweeter deals. Slave labour is a big plus for their strategy.

We seem to have much to learn from China who is unapologetic about expecting something in return for their investment and help. America has become PC and suffers from “guilt” for the past. Screw that! I would far rather have countries respect America than like America. First we must respect ourselves and stop this stupid socialist liberal PC drivel.

The Chinese are not just sweeping south america, they are also vacuming cleaning the USA for ideas. Consider thorium.

Thorium, US energy independence and Obama´s Sputnik moment
By Coach Collins, on May 17th, 2011

When stacked up against the energy costs associated with various sources, thorium is stunning. One lb. of Thorium according to Nobel laureate Carlo Rubbia is equal to 200 lbs. of uranium, or a breathtaking 3.5 million lbs. of coal.

The U.S.G.S.’ estimate of 915,000 tons of high quality thorium ore (just considering holdings in Idaho and Montana) establish the U.S. as arguably the #1 thorium holding nation in the world.

Now if Obama is known for anything it is for his majestic non-sequiturs. His 2011 State of the Union proves the point. He stated: ” At stake is whether new jobs and industries take root in this country, or somewhere else. It’s whether the hard work and industry of our people is rewarded.” Later on, he claimed “This is our generation’s Sputnik moment”.

While Obama curiously mentioned Oak Ridge in his address he did so highlighting efforts to basically tweak existing nuclear technology and ignored thorium reactors and the (if I can plagiarize his speech a bit) hard work and industry of our people (plus the millions of dollars already spent) to develop them.

Obama also seems to be oblivious to the fact that a Chinese delegation visited Oak Ridge in the autumn of 2010 and expressed interest in thorium fuel to scientists there. America’s economic crisis demands a quantum reduction in energy generation costs through thorium based power and the spectacular job creating dynamics these massive savings entail.

Following up, no doubt, on their visit to Oak Ridge, the Chinese announced within days of Obama’s 2011 State of the Union Address that they intend to not only develop a research & development effort to create molten salt thorium reactors, but also to develop and control intellectual property rights to thorium for their own advantage! The Sputnik moment indeed has arrived.http://www.coachisright.com/thorium-us-energy-independence-and-obama%C2%B4s-sputnik-moment/#